A trade group representing hundreds of software vendors is considering a lawsuit against eBay for what it calls widespread sales of counterfeit software on the auction site.
The Software and Information Industry Association (SIIA) has offered eBay several suggestions for stemming the sale of pirated software on its site, but the auction giant has rejected most of those ideas, said Keith Kupferschmid, senior vice president of the SIIA's antipiracy division. "We are at our last straw here," Kupferschmid said Friday. "If eBay continues to stiff-arm us ... then we will certainly consider litigation as an option."
The SIIA doesn't have immediate plans to file a lawsuit, but its members talked about the possibility during a meeting in May, Kupferschmid said. The lawsuit would likely accuse eBay of secondary copyright infringement, he said.
An eBay spokeswoman defended its efforts to police against software piracy. eBay has put volume restrictions on software sellers, and it has eliminated short-term auctions on categories of software most likely to be counterfeit, said Nichola Sharpe of eBay.
EBay's VERO (Verified Rights Owner) program, in place since 1998, allows rights owners to contact eBay and have items removed from auction listings. EBay has long worked with SIIA on software piracy, and eBay officials plan to reach out to SIIA after hearing about the potential lawsuit, Sharpe said.
SIIA has implemented some SIIA suggestions, but it must weigh the effect of SIIA's requests on its business, she added. "Our view is: Collaboration is key," she said. "We've put a lot of (antipiracy measures) in place on our own."
Earlier this month, in a similar lawsuit against eBay, a judge for the U.S. District Court for the Southern District of New York ruled that eBay has taken sufficient steps to protect against sales of fake Tiffany jewelry items.
eBay pulled Tiffany items suspected of being counterfeit as soon as they were reported to the auction site, Judge Richard Sullivan said in his ruling. Trademark law does not require eBay to preemptively remove listings of Tiffany jewelry suspected of being fake, the judge said.
Sullivan's ruling came two weeks after Tribunal de Commerce in Paris fined eBay €40 million ($62.7 million) for allowing the sale of Louis Vuitton Malletier and Christian Dior Couture counterfeit goods. EBay has said it will appeal the decision and spends about $20 million a year on efforts to remove counterfeit products from its site.
An SIIA lawsuit would likely focus on copyright infringement instead of trademark infringement, unlike the Tiffany case, and there's a more established track record of secondary copyright infringement lawsuits, Kupferschmid said. Trade groups representing the U.S. music and movie industries successfully sued peer-to-peer services Grokster and Morpheus in a case that ended up with the U.S. Supreme Court in 2005, and the music industry was successful in its attempt to shut down the original Napster music-sharing service.
The Digital Millennium Copyright Act (DMCA) of 1998 and other copyright law sets out strong standards for secondary copyright infringement, Kupferschmid said. U.S. copyright law allows lawsuits for vicarious infringement, when the defendant has the ability to stop infringing activity and has a direct financial interest in the infringement.
The SIIA has asked eBay to end all one-day and buy-it-now auctions of software, and the group has asked to buy a banner ad on eBay aimed at educating consumers about software piracy. eBay has so far rejected both of those ideas, but it has recently told SIIA it is reconsidering some of the trade group's suggestions, Kupferschmid said.
Ending buy-it-now and one-day auctions would allow SIIA to better track software sales on eBay, he said. SIIA has several staff members and a proprietary software program that attempt to flag infringing software on eBay.
Ending short-term auctions on software "would go a long way toward addressing most of our concerns," Kupferschmid said. "Until they actually do what we're requesting them to do, I still consider it a rejections."
This year, the SIIA has filed 32 lawsuits against eBay sellers accused of marketing counterfeit software. This week, an Oregon man was sentenced to four years in prison for identity theft and for selling counterfeit software on eBay, after the SIIA complained about him.
eBay applauded the prison sentence for the Oregon seller. "We don't want counterfeiters to be on the site any more than our buyers and sellers do," Sharpe said.
This story was updated on July 25, 2008